Twin Cities Multifamily Report – Summer 2021
Same as most Midwestern metros, Minneapolis-St. Paul has returned to sustainable levels of growth.
Twin Cities rent evolution, click to enlarge
After a healthy run following the shock brought by the health crisis—when many residents fled gateway metros—the Twin Cities multifamily market seems to be returning to its pre-pandemic trend of slower growth. Rent expansion was flat month-over-month as of July, while on a trailing three-month basis rates were up a relatively low 0.5 percent, 110 basis points below the U.S. rate.
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Twin Cities sales volume and number of properties sold, click to enlarge
Unemployment remained above pre-pandemic levels—4.5 percent as of June, according to preliminary Bureau of Labor Statistics data. The Minneapolis downtown area was particularly hard hit by the latest economic downturn, as companies started to embrace flex work arrangements. After Target Corp. announced it will vacate nearly 1 million square feet of office space in City Center, nonprofit Portico Benefit Services also disclosed plans to relocate its workers from downtown Minneapolis to Edina. Job losses in the city’s core will be partially offset by Deluxe Corp., a company that is bringing its 525 workers to the 801 Marquette Building in Minneapolis’ CBD this fall.
In 2021 through July, developers completed 4,232 units. Yardi Matrix expects almost 8,400 units to be added to Twin Cities’ stock this year, which would mark a decade high. Some urban areas are under intense pressure to absorb recently delivered units, with occupancy in stabilized properties for the metro’s urban section declining from 95.1 percent in June 2020 to 94.2 percent in June 2021.
